S&P downgrades CEFC rating

Credit ratings agency Standard and Poor's (S&P) downgraded its underlying rating on US$120mn and US$200mn senior secured notes issued by the CEFC (Chilquinta Energia Finance Co) unit of Chilean power distributor Chilquinta to BBB- from BBB, S&P said in a statement. S&P also affirmed its final AAA rating on the notes, which are due 2008 and 2011 respectively. The outlook is negative. The action follows the recent downgrade of the corporate credit rating on PSEG Energy Holdings Inc to BB- from BBB. PSEG and fellow US energy company Sempra own Chilquinta on a 50:50 basis. The negative outlook reflects the refinancing risk presented by uncovered bullet payments in 2008 and 2011 considering weaker parent support, CEFC's significant leverage, and uncertainties related to operations in Peru, where Chilquinta controls distributor Luz del Sur, S&P analyst Sergio Fuentes said.